Value Relevance of Nonfinancial Information: The Case of Patent Data

35 Pages Posted: 2 Mar 1998

See all articles by Mark Hirschey

Mark Hirschey

University of Kansas

Vernon J. Richardson

University of Arkansas at Fayetteville

Susan Scholz

University of Kansas - Accounting and Information Systems Area

Date Written: January 1998

Abstract

This paper documents the value-relevance of nonfinancial information on the quantity and quality of inventive output for high-tech companies. We find that the number of patents and information on the quality of patents have consistently positive effects on stock prices. Interestingly, this information does not appear to diminish the value-relevance of accounting data on the firm's financial performance and R&D expenditures. Like findings reported by Amir and Lev (1996) for the wireless communications industry, these results suggest an important complementary relation between traditional financial information and nonfinancial data in the high-tech sector. The findings also lend credence to the suggestion of the AICPA Special Committee on Financial Reporting that firms disclose nonfinancial performance measures to provide insight into a company's operations. In particular, patent statistics concerning the quantity and quality of inventive output appears to sharpen the investor's perception of the ongoing value created by the firm's inventive and innovative activity.

JEL Classification: M41, M45, G12

Suggested Citation

Hirschey, Mark and Richardson, Vernon J. and Scholz, Susan, Value Relevance of Nonfinancial Information: The Case of Patent Data (January 1998). Available at SSRN: https://ssrn.com/abstract=63589 or http://dx.doi.org/10.2139/ssrn.63589

Mark Hirschey (Contact Author)

University of Kansas ( email )

School of Business
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Lawrence, KS 66045-7585
United States
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HOME PAGE: http://www.business.ku.edu/gen/bschool_generated_pages/Hirschey_Mark_p2272.html

Vernon J. Richardson

University of Arkansas at Fayetteville ( email )

401 WCOB
Fayetteville, AR 72701
United States

Susan Scholz

University of Kansas - Accounting and Information Systems Area ( email )

1300 Sunnyside Ave
Lawrence, KS 66045
United States
785-864-7554 (Phone)
785-864-5328 (Fax)

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